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No Free Lunch

Pursuing the common good

/ 12:34 AM January 10, 2017

Greed is good,” a famous line from the 1987 movie “Wall Street,” was a more extreme expression of a postulate advanced by Adam Smith, widely regarded as the father of modern economics. Smith probably would have said it less bluntly, using “self-interest” in place of “greed.” He argued that letting people pursue their own self-interest, as they interact freely through the markets for goods and services, generally leads to efficient economic outcomes, that is, the best allocation of resources in the economy.

The problem is that personal good and the common good (or at least the greatest good for the greatest number) usually don’t converge, especially from the viewpoint of key decision-makers in society. More often than not, actions that promote the common good run counter to one’s own self-interest. The challenge, then, is to get the common good and personal good to coincide. People need to see that achieving the common good ultimately redounds to their own personal good—and that impairing the common good also impairs their own personal good.

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The impatient driver who creates a new counterflow lane in congested traffic, for example, must understand that doing so only worsens the traffic jam and will only make himself and everybody else worse off. Taxpayers who conceal their true income from tax authorities must realize that this behavior ultimately makes their own lives harder, as the quantity and quality of public facilities and services are compromised by lack of government revenues. Government’s duty here is to make taxpayers directly see how their taxes are helping uplift their own lives—a connection that is undermined when there is widespread graft and corruption.

What would it take to get people to act for the common good even as they pursue their own personal good? How can the two converge?

Having the right leaders is crucial. Leaders in society, starting with the highest official, must embody this ethic of upholding the common good. By the leaders’ example, those who are led are likely to imbibe  in turn the same ethic. Economic incentive systems must be designed in a way that makes the common good and private good converge. Corporate social responsibility is attractive as it is often actually self-serving on the part of the firms that practice it. While enhancing the common good, such activities ultimately redound to the company’s own good, as its enhanced image improves its market attractiveness.

Social tensions and threats may provide the impetus for people to work for the common good. Social upheavals remind everybody, especially the rich and powerful, that a highly polarized society puts their very security and peace of mind under threat. It is in everybody’s interest, then, to work for a fairer distribution of the economy’s wealth and opportunities. National pride has played a key role in some countries to get people to set aside personal welfare for the sake of the common good. Koreans gave up their gold possessions to their national reserves at the height of the Asian financial crisis, as did the Thais.

Spiritual and moral renewal that transforms people’s values and ethics is an important means of leading people to change toward acting in the interest of the common good.  The surge in spirituality in the various religious churches is a positive force toward achieving the common good.

Finally, where decision-making structures and mechanisms provide widest participation, there is stronger likelihood that the common good would be served. The worldwide trend toward participative and devolved governance is a welcome development. The Philippines has been a forerunner in Asia in this regard, thanks to past leaders who made deliberate moves to welcome wider and meaningful participation by civil society and business in the nation’s governance.

Recent financial crises have done much to discredit the free market-based development paradigm based on the “greed is good” philosophy. A new paradigm is emerging, where outcomes are driven not by individuals pursuing their individual greed, but by communities working collectively for the common good.

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TAGS: common good, economics, economy, greed, market, opinion, Resources
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